‘Zombie’ mines and high prices help Australia stay near top of the gold pack
While some commentators have suggested the Australian gold sector is in decline, facts and figures show that the hunt for the precious metal is still receiving major investment interest.
Australia is the holder of the world’s largest gold reserves even though it has been the focus of numerous gold rushes and massive mining operations since the 1850s.
The nation is estimated to still have 9,500 tonnes or 17% of the estimated total global gold reserves, making it number one in the world in economic resources for gold.
Despite critical minerals attracting most of the government and market attention in recent years, gold still remains the most explored for commodity, accounting for 38% of all mineral exploration expenditure in 2022.
With around 160 operating mines, Australia currently sits at number three with 10% of global production, bringing in $23,508 million in export income.
Zombie mines on the rise
However, a surge in new “zombie” mine activity and a raft of new discoveries, suggests that the nation may be heading back towards the top in that category as well.
The run in gold prices over the last few years has seen a number of mines that were shut down when gold prices slumped in the 1990s being reinvigorated.
Bellevue Gold’s (ASX: BGL) namesake mine in Western Australia is a prime example of the opportunities some of these historic old mines can provide.
The gold-rich mine was thought to have been dead years ago but it is now on track to regain its title as one of the nation’s highest grade gold producers.
Similar stories are happening all over the nation.
New gold finds as companies utilise improved technology to look under surface cover to find plays in areas that were previously thought to be of no interest are also creating new exploration opportunities.
De Grey Mining’s (ASX: DEG) Hemi discovery in 2019 is one such site.
Hemi has proven to be one of the largest Australian gold discoveries in decades, driven by its size, grade continuity and growth potential and has attracted companies from all over the world to participate in the latest Pilbara “gold rush”.
Gold price strength
Gold hit a record high overnight on the back of strong investor buying.
ANZ senior commodity strategist Daniel Hynes noted in his daily “Market Wrap” that demand for bullion is being well supported by the uncertain economic backdrop and elevated geopolitical risks.
He also reported that speculation in recent weeks policymakers are about to switch to an easing bias triggered the latest rally.
“The precious metal rose as much as 1.3% to US$2,141 per ounce (A$3,296) before paring gains,” he said in the report.
“This comes despite no macroeconomic drivers emerging.”
“It appears that many investors have been left out by the recent move higher and with the rising risk of a stock market correction have decided to move into gold.”
“They join central banks, who have been strong buyers for some time,” he reported.
With tonnes of gold yet to be found and prices continuing to fly, the precious metal is sure to remain a major focus for explorers and investors in Australia.